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Whole Foods Takes a Gamble on Detroit

For the many people who have been saturated with media-driven images of run-down buildings, ruin, dilapidation and violent crime, the news that Whole Foods (NASDAQ: WFM) is opening a 20,000 square-foot supermarket in Detroit will confuse and bemuse.

However, those that live in the area, plus the executives at the Austin, Texas retailer, know better. Detroit is a city on the rise, being driven forward (no pun intended) by the Big 3 automakers and a slowly blossoming tech industry. Detroit is the place to be.

The 75 employees that Whole Foods initially plans to hire will barely make a dent in the Motor City unemployment figures, but still, that's 75 people with a job that didn't have a job before. But the reality is that Whole Foods, like Twitter earlier this month, is serving as a symbol. Big businesses with branded names are coming to Detroit. Something is happening.

The Associated Press noted on Friday that the Midtown area of Detroit (formerly the Cass Corridor) has some way to go before it can claim the sort of revitalization success enjoyed in cities like New York and Chicago, but it is well on its way. Wayne State University and the Detroit Institute of Arts are cultural institutions, not just in the area but nationally, and the rebuilding and rebranding of Midtown is starting there. Wayne State has even been campaigning to encourage people who work in Midtown to move their homes back to the area.

So what does Detroit have to offer Whole Foods right now? Well, the aforementioned campaigns have been showing signs that they are working and Midtown is now seeing more young people, including students, move there.

"This is the one area (in Detroit) that has a different demographic — more upscale, more youth, more students. It's a great concentration of people," said Kenneth Dalto, a Michigan retail analyst. "They are buying into the plans of Detroit to grow the corridor."

The company admits that it will go lighter on many of the gourmet foods that people in the area will simply not be able to afford. It would be foolish to try to force expensive gourmet food on an area that isn't yet fully gentrified. In other words, the executives at Whole Foods are not just running at this without thinking. They have done their homework.

There are still some concerns from residents that not everyone will be able to afford to shop at Whole Foods, but most people see the fact that a company like Whole Foods is willing to take a chance on Detroit as a major step forward.